Japan Industrial Output: Updated April 16, 2024.

 

Japan's 2023 industrial output falls 1.1%, down for 2nd year

Article Source:  https://mainichi.jp/english/articles/20240131/p2g/00m/0bu/013000c

Ideas:

A decrease of 1.1 percent is not much, but of course, for investors who are obsessed over every percentage point it might be important.

Demand for semiconductors are both a positive and negative, as the semiconductor industry has been going through periods of logistics and supply shocks the last few years.

The Chinese economy is a different situation, as it seems to be going through a transition or restructuring period, and it will take some time for it to solve.

Japan seems to place a lot of emphasis on industrial output as its related to Japanese export companies, and if industrial output is down, exports might be down too.

In a market economy, not all sectors or industries are going to be positive and there are gong to be some positive sectors/industries and some negative sectors/industries. 

The Japanese car market as been up and down the last few years due to the logistics and chip shortage. For example, in 2002, it was noted that it was taking up to six months to get a new car in Japan, once ordered.

Chips are used by everything electronic now days and maybe chip manufacturers were caught off guard about the increase in demand for chips needed for many different products.

The semiconductor market is very diverse and almost every kind of electronic device uses chips today.

The US and Chinese economies, at the present time, seem to be headed in different directions. The US economy seems to be headed in the right direction, with inflation either staying the same or decreasing. 

The Chinese economy, again, seems to be in a restructuring period after decades of positive growth. The Chinese economy is expected to increase but not at the same level as before.

The Toyota group was hit by some challenges related to Daihatsu, which produces some small cars and some regular Toyota cars too.

It just goes to show, that even a name brand such as Toyota can have some serious challenges if not looked at carefully, as maybe someone in the quality control area, in Daihatsu or Toyota was more concerned with production schedules and not so much concerned with quality control issues.

The area that was hit by the earthquake, while not limiting the human suffering, is not a significant area for economic activity in Japan.

If the earthquake had hit Osaka, Nagoya, or some other major metropolitan area in Japan, it might have been even more devastating.

The decrease of industrial shipments at 0.5 percent, again, is not that significant, as it could be in the margin of error of + or 1 0.5 percent.

The inventory index is interesting, as a decrease or increase of inventories can be strong indicators or what going on in an economy.

If inventories start to trend upward, meaning for example many company's factories or warehouses are starting to have long periods of product not moving, that might be an indication the demand is slowing in an economy.

If the opposite is true and inventories are not sitting in warehouses for very long, can could be an indicators of demand in an economy is strong.

"Fluctuating indecisively" is most likely correct has there are going to be periods of ups and downs, and factories shutdown and or have material shortages and or repairs needed.

The fact that the industrial shipments increased is a good indication that maybe global demand for Japanese industrial products is strong.

And at the same time, the fact that inventories declined is a good indication that maybe demand for Japanese industrial products was strong and companies can't keep up demand.

Production is never linear, upward, as there are always stops and starts in manufacturing, due to material shortages, logistics challenges, downtime for repairs and so on.

The trick, of course, is for manufacturers to be able to plan as much as possible any downtime periods and factor them into the production schedules.

There are probably many different sectors related to production in Japan, and maybe many of them are export oriented, as Japanese manufacturers are noted for their attention to detail such as maybe German manufacturers. 

Even though the Japanese economy is the 4th largest economy in the world, with a population of 125 million, its focus seems to be exporting including the exporting of industrial products and not just Japanese cars or baseball players.

Have a nice day and be safe!